This pre-qual requirement DOES lose them sales and results in lower sale prices, in some cases. I have seen buyers who have an agent representing them refuse to do the CW pre-qual, as that gives the seller the upper hand in the deal. Say the house is priced at $90k, the buyer easily qualifies for $100k, but they offer $80k... The seller knows the seller can pay full price, so they don't negotiate off the list price as much. Any good buyers rep would not let their buyers give the other side all their financial info!
On the other hand, because many people refuse to jump through CW hoops, the homes often sit longer and get reduced more than they should have to, and the bank gets less for them...

OHAgent - There is one in grove city at the moment that is requiring the pre-qual.

It seems like they're pricing them to reflect the lost value for the letter. The house seems underpriced by about $20k even in poor shape.

I just had someone prequal through them just the other day and they were almost in tears when the buyer decided to go with Wells Fargo, so it does appear they are still writing new loans.